Black Friday arrives in China

By Zhang Ye Source:Global Times Published: 2014-11-28 0:48:01

Amazon pushes overseas deals in play for market share


Just two weeks after November 11's 57.1 billion yuan ($9.3 billion) record-breaking "Double-11" shopping festival - a creation of Chinese e-commerce giant Alibaba - local consumers are being lured by foreign competitors such as Amazon, which are offering access to overseas deals amid the frenzy of the US' "Black Friday" shopping spree.

Using a special Black Friday link on Amazon China's homepage, the US online retailer claims that Chinese-language shoppers will be able to directly snap up foreign bargains on Friday.

Amazon has also paired up with China Merchants Bank to offer free delivery to shoppers who pay using the bank's credit card.

Having struggled to make progress in China, Amazon is hoping that it can boost its presence in a domestic market that has been dominated by heavyweight Chinese players such as Alibaba and jd.com, especially now that Alibaba is opening overseas sales platforms to compete head-on with foreign peers during the Black Friday shopping season.

Alipay, Alibaba's third-party online payment arm, also recently announced that its nearly 200 million active Alipay users will be able to buy goods from the websites of four major US retailers - Neiman Marcus, Bloomingdale's, Saks Fifth Avenue and Macy's - during the Black Friday season.

Guo Min, a mother of a 3-year-old daughter in Beijing, said she was extremely interested in the Black Friday sales promotions.

"I plan to look at the products offered on both Amazon China's and Alibaba's sites, in case there are really good bargains," she said.

Guo told the Global Times that she once bought a bag on an overseas website for half what it would have cost her in China, even after adding customs tax and delivery costs.

However, analysts are not optimistic about Amazon's making inroads into China, citing fierce competition and other obstacles such as customs costs.

Amazon's current business model in China - selling goods from local suppliers - has not performed well, Zhang Yi, CEO of Shenzhen-based market research firm iiMedia Research, told the Global Times Wednesday.

The company has never disclosed the revenue of its China unit in its financial reports, but its market share still lags far behind Chinese rivals such as Alibaba, despite nearly a decade of effort.

According to a report issued by Beijing-based market consultancy iResearch in early November, Amazon's Chinese site accounted for just 1.3 percent of China's business-to-consumer sales transactions in the third quarter, ranking eighth, while Alibaba's Tmall maintained its top spot at 57.6 percent, with jd.com second at 19.3 percent.

However, Amazon believes that offering access to overseas shopping events will give it an edge on local rivals in China, and the company has been promoting the event since the beginning of November.

Despite its international supply chain and powerful logistics network worldwide, Amazon's overseas purchasing strategy is not likely to give it much of an advantage in China, Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting, told the Global Times Tuesday.

Both Lu and Zhang said it was hard to tell who will come out ahead, as the major e-commerce companies each have their own advantages.

"Amazon has more influence than domestic players in terms of prices and product quality control when dealing with overseas suppliers. But Alibaba's large user base and high brand recognition in China can benefit its global sales business. And jd.com, which has its own warehouses, offers better logistics and after-sales services," said Lu.

Some domestic consumers have expressed lukewarm attitudes toward Amazon China and Alipay's Black Friday sales promotions.

"Starting in October, Amazon's US site began offering direct delivery to China. It has almost all the features Amazon China has, apart from the Chinese language," Rosemary Zhu, a 30-year-old Shanghai resident, told the Global Times.

Mao Xiaoyi, a 29-year-old Beijing resident, also appeared unenthusiastic about Alibaba's new sales promotions, partly because Alibaba lacks its own delivery network.

"The parcel I bought from Alibaba's Tmall on Singles' Day has not arrived yet, which makes me less confident about its international shipping," Mao told the Global Times.

Lu also noted that customs tax is a big obstacle for Chinese consumers looking to buy overseas.

Both Amazon and Alibaba said shoppers will be required to pay customs taxes, and that duties will not be lowered during Black Friday.

In China, imported goods are duty-free only if the customs tax comes to less than 50 yuan ($8.15), although there are 20 types of products including consumer electronics and appliances that are exempt.

Meanwhile, according to Amazon China, the company is making inroads into the newly established China (Shanghai) Pilot Free Trade Zone, in the hope that potential favorable trade policies in the zone could help to lower taxes.



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